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Niantic is updating Pokémon GO and other titles to support indoor gaming

Published March 30, 2020

Niantic, the development company behind popular AR mobile games Pokémon GO and Harry Potter: Wizards Unite, is adapting its titles to support at-home gaming in response to the COVID-19 pandemic. Typically, Niantic’s games have encouraged people to go outdoors, explore their world and connect with others in real life as they played. But with government lockdowns and home quarantines under way, it’s no longer safe to play these games as originally intended.

The company says it will now prioritize making changes to its AR titles to allow people to play inside and around their own homes.

For example, Niantic’s Adventure Sync function will now track your indoor steps as you do things like run on a treadmill, clean your house or make other indoor movements and activities. It’s also enhancing the games’ social features to allow friends to stay in touch virtually, and soon take on Raid Battles together while staying at home.

Instead of discouraging virtual movement inside the game, as Niantic has in the past, players will be able to virtually visit and share memories about their favorite real-world places. And this summer, Niantic will re-imagine its plans for live events to allow players to participate without having to leave home.

These updates aren’t just those made for the consideration of players’ needs during this time of crisis — they’re also necessary changes to ensure Niantic continues to operate both during the pandemic and beyond.

Niantic’s live events have driven big business to the cities that hosted them — nearly $250 million in tourism revenue in 2019, it once said. It also served as a mechanism to drive its own revenues and keep players engaged over time. The plan had worked — Pokémon GO has continued to grow, even though it’s not the hyped-up global phenomenon it was at launch. Last year was its highest-grossing year ever, a report from Sensor Tower found, as the game pulled in nearly $900 million in player spending in 2019. Much of the revenue was due to the game’s significant updates and real-world events, the report noted.

These latest updates aren’t the first changes Niantic has made in response to the COVID-19 outbreak. It had already modified gameplay in Pokémon GO to encourage users to stay inside — including by rewarding players who caught their Pokémon while inside, for example. It also just launched a new form of gameplay called the GO Battle League, which can be played from home, with reduced walking requirements and discounted select items so players wouldn’t have to walk as far to catch Pokémon, among other things.

In Harry Potter: Wizards Unite, the company increased the amount of content that’s near players on the map, so they could progress in the game without traveling far. Potions were also tuned to support people playing from home.

And in both titles, gifts were adjusted to include more helpful content throughout each day.

In Niantic’s first game, Ingress, it has made a few changes, too. Ingress Portals are now tuned to encourage at-home play and it has reduced the need to interact with multiple Portals. Several other changes make it easier to play the game without having to walk around as much.

Niantic has not yet gone so far as to fully eliminate the use of outdoor walks as a means of gameplay, however. Instead, it still encourages people to get outside — in areas where it’s permitted by local authorities to go for walks.

Though Niantic had made earlier changes to its games due to the outbreak, today’s announcement represents a more formal strategy for its business. It also lays out a detailed roadmap of what Niantic has in store. Not all its new features are live. Instead, Niantic says they’ll roll out in the “coming days and weeks,” without committing to an exact time frame.

“We created Niantic with a mission to help people get outside, exercise, and explore the world, with the ultimate goal of helping people connect with others. Today we support a global community of hundreds of millions of people who look to our games for regular entertainment and an opportunity to get outside and connect with friends,” said Niantic founder and CEO John Hanke, on the company blog.

“We have always believed that our games can include elements of indoor play that complement the outdoor, exercise and explore DNA of what we build. Now is the time for us to prioritize this work, with the key challenge of making playing indoors as exciting and innovative as our outdoor gameplay,” he added.

Amid concerns that startups could be left out of COVID-19 bailout, investors step up lobbying

Published March 30, 2020

The massive bailout package that the U.S. government passed last week to stave off an economic collapse from measures put in place to mitigate the spread of the COVID-19 epidemic is giving out billions to American small businesses. But startups that received venture capital money could be left out.

So the nation’s investment organizations and lobbying firms are stepping up their efforts to get clarification around the specifics of the loan programs established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Their efforts could mean the difference between some of those billions in loans for small businesses going to startup companies or a whole swath of companies left falling through the cracks.

There appear to be two issues for startup entrepreneurs with the different types of loans that companies can receive.

The first is the “Affiliation Rules” that the Small Business Administration (SBA) uses to determine who is eligible for loans. Under the rules, companies could be required to count all of the employees at every company their investors have backed as part of their employee count — pushing the individual companies above the employee size threshold.

“Regardless of the purpose of these rules for traditional 7(a) loans, allowing the rules to exclude some of our country’s most innovative startups in this new loan program is manifestly contrary to the intent of the legislation: to help small businesses keep their lights on and their employees working despite the double financial squeeze created by the economic and financial market downturns,” according to a letter sent to Treasury Secretary Steve Mnuchin and SBA Administrator Jovita Carranza by the NVCA and other startup investment organizations. “Without clear guidance enabling startups and small businesses supported by equity investment to access the loan facility, many of these startups may be rendered ineligible.”

These issues around affiliation and 7(a) loans aren’t the only ones with which startups may contend. Startups could also be eligible for Economic Injury Disaster Loans (EIDL). These loans are part of a $10 billion program within the CARES Act that is also overseen by the SBA. However, these loans have to come with a personal guarantee if they’re over $200,000. And that requirement may be too onerous for startups.

EIDLs less than $200,000 don’t require a personal guarantee, nor do they require real estate as collateral, and will take a general security interest in business property, according to an article in Forbes. Borrowers for EIDLs can take an emergency cash grant of $10,000 that can be forgiven if spent on things like paid leave, maintaining payroll, increased costs due to supply chain disruptions, mortgage or lease payments or repaying obligations that cannot be met due to revenue loss, according to Forbes.

These loans apply to sole proprietors and independent contractors and employee stock ownership plans with fewer than 500 employees, Forbes wrote. The emergency loans are available to companies that don’t qualify for additional funds — and are based on self-certification and a basic credit score, Alex Contreras, director of Preparedness, Communication, & Coordination at the Office of Disaster Assistance for the SBA told Forbes.

While the EIDLs may be interesting, the biggest issue is the lack of clarity around affiliation rules, Justin Field, NVCA’s senior vice president of government affairs, tells me.

“These rules will make it more difficult for small businesses with equity investors to even understand if they can access the program,” he says. “It’s a tough situation… If you have these non-bright-lined rules it’s going to be tough for anybody that has a company that has minority investors.”

There could be significant implications for the U.S. economy if these startups are ineligible for loans, the NVCA wrote. Companies backed by venture investors are involved in the development of technologies of strategic interest to the U.S. in the long term and are currently working on tools to diagnose, track, monitor and mitigate the spread of COVID-19 in the short term.

“Bottom line: not providing this critical support to startups now will cause both short-term pain and long-term consequences that linger for years,” the organizations wrote. “In 2019 alone, 2.27 million jobs were created in the U.S. by startups across our nation. According to the job site Indeed, 98 percent of firms have fewer than 100 employees and between small and medium sized companies, they jointly employ 55 percent of employees. When implementing the CARES Act, we urge the SBA to issue guidance that makes clear affiliation rules do not arbitrarily exclude our most innovative startups.”

SMB loans platform Kabbage to furlough a ‘significant’ number of staff, close office in Bangalore

Published March 30, 2020

Another tech unicorn is feeling the pinch of doing business during the coronavirus pandemic. Today, Kabbage, the SoftBank-backed lending startup that uses machine learning to evaluate loan applications for small and medium businesses, is furloughing a “significant number” of its U.S. team of 500 employees, according to a memo sent to staff and seen by TechCrunch, in the wake of drastically changed business conditions for the company. It is also completely closing down its office in Bangalore, India, and executive staff is taking a “considerable” pay cut.

The announcement is effective immediately and was made to staff earlier today by way of a video conference call, as the whole company is currently remote working in the current conditions.

Kabbage is not disclosing the full number of staff that are being affected by the news (if you know, you can contact us anonymously). It’s also not putting a time frame on how long the furlough will last, but it’s going to continue providing benefits to affected employees. The intention is to bring them back on when things shift again.

“We realize this is a shock to everyone. No business in the world could have prepared for what has transpired these past few weeks and everyone has been impacted,” co-founder and CEO Rob Frohwein wrote in the memo. “The economic fallout of this virus has rattled the small business community to which Kabbage is directly linked. It’s painful to say goodbye to our friends and colleagues in Bangalore and to furlough a number of U.S. team members. While the duration of the furlough remains uncertain, please bear in mind that the full intention of furloughing is temporary. We simply have no clear idea of how long quarantining or its reverberations in the economy will last.”

Kabbage’s predicament underscores the complicated and stressful calculus faced by tech companies built around providing services to SMBs, or fintech (or both, as in the case of Kabbage).

SMBs are struggling right now in the U.S.: many operate on very short terms when it comes to finances, and closing their businesses (or seeing a drastic reduction in custom) means they will not have the cash to last 10 days without revenue, “and we’re already well past that window,” Frohwein noted in his memo.

In Kabbage’s case, that means not only are SMBs not able to be evaluated and approved for normal loans at the moment, but SMBs that already have loans out are likely facing delinquencies.

The decision to furlough is hard but in relative terms it’s good news: it was made at the eleventh hour after a period when Kabbage was considering layoffs instead.

The company has raised hundreds of millions of dollars in equity and debt, and it was in a healthy state before the coronavirus outbreak. The memo notes that the “board and our top investors are aware of the challenges we are facing and have committed to helping us through this period,” although it doesn’t specify what that means in terms of financial support for the business, and whether that support would have been there for the business as-is.

The shift to furlough from layoffs came in the wake of an announcement yesterday by Steven Mnuchin, the U.S. Secretary of the Treasury, who clarified that “any FDIC bank, any credit union, any fintech lender will be authorized” to make loans to small businesses as a part of the U.S. government’s CARE Act, the giant stimulus package that included nearly $350 billion in loan guarantees for small businesses.

While that provides much-needed relief for these businesses, the implementation of it — the Small Business Administration has already received nearly 1 million claims for disaster-relief loans since the crisis started — has been and is going to be a challenge.

That effectively opens up an opportunity for Kabbage and companies like it to revive and reorient some of its business. (Its USP was always that the AI it uses, which draws on a number of different sources of online data for the business, means a more creative, faster and more accurate assessment of loan applications than what traditional banks typically provide.) Kabbage said it is in “deep discussions” with the Treasury Department, the White House and the Small Business Administration to help expedite applications for aid.

While loans still make up the majority of Kabbage’s business, the company has been making a move to diversify its services, and in recent times it has made acquisitions and launched new services around market intelligence insights and payments services. While there has certainly been a jump in e-commerce, overall the tightening economy will have a chilling effect on the wider market, and it will be worth seeing what happens with other tech companies that focus on loans, as well as adjacent financial services.

Anorak’s Greg Castle on early-stage investing during a crisis

Published March 30, 2020

As the venture landscape adjusts to the COVID-19 pandemic and seismic shifts in public markets, early-stage VCs are reassessing which bets they’re making, along with questions they’re asking of founders who are exploring bleeding-edge technology.

Anorak’s Greg Castle

Anorak Ventures is a small seed-investment firm that bets on emerging tech like AR/VR, machine learning and robotics. I recently hopped on a Zoom call with founder Greg Castle to talk about what he’s seen recently in seed investing and how the sector is responding to the crisis. Castle was an early investor in Oculus; his other bets at Anorak include Against Gravity, 6D.ai and Anduril.

Our conversation has been edited for length and clarity.

TechCrunch: Has this pandemic affected the types of companies that you’re looking at?

Greg Castle: From my experience as an investor thus far, being reactive as an investor and looking at “hot” areas has a lot of pitfalls to be mindful of. I think a lot of the areas that excite me as an investor could benefit from what’s going on here, those areas including robotics, automation, immersive entertainment and immersive computing.

Just generally, do you feel like a recession is likely to negatively impact emerging tech more so than other areas?

This Week in Apps: Apple launches a COVID-19 app, the outbreak’s impact on social and video apps and more

Published March 28, 2020

Welcome back to This Week in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support and the money that flows through it all.

The app industry saw a record 204 billion downloads and $120 billion in consumer spending in 2019, according to App Annie’s “State of Mobile” annual report. People are now spending 3 hours and 40 minutes per day using apps, rivaling TV. Apps aren’t just a way to pass idle hours — they’re a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.

In this Extra Crunch series, we help you keep up with the latest news from the world of apps, delivered on a weekly basis.

This week, we’re continuing our special coverage of how the COVID-19 outbreak is impacting apps and the wider mobile app industry as more COVID-19 apps appear — including one from Apple built in partnership with the CDC, among others. We also take a look at the gains made by social and video apps in recent weeks as people struggle to stay connected while stuck at home in quarantine. In other headlines, we dig into Instagram’s co-watching feature, the Google for Games conference news, Apple’s latest releases and updates, Epic Games expansion into publishing and more.

Coronavirus Special Coverage

Social video apps are exploding due to the COVID-19 pandemic

John Borthwick & Matt Hartman of betaworks discuss coronavirus adaptation strategies

Published March 27, 2020

Yesterday, I had the pleasure of hopping on Zoom with betaworks’ John Borthwick and Matt Hartman to discuss the tech world’s adaptation to this new locked-down world, the future of new media and answer questions from the audience.

We discussed whether new media companies can raise capital right now, and touched on emerging trends around audio, voice, AR, live events, travel-related companies and many other topics.

It was a delight, and I’m excited to do more of these in the future.

For those of you who missed the Zoom, here’s a rundown of what we discussed (audio embed below).

Rocket startup Skyrora shifts production to hand sanitizer and face masks for coronavirus response

Published March 27, 2020

One of the newer companies attempting to join the rarified group of private space launch startups actually flying payloads to orbit has redirected its entire UK-based manufacturing capacity towards COVID-19 response. Skyrora, which is based in Edinburgh, Scotland, is answering the call of the UK government and the NHS to manufacturers to do what they can to provide much-needed healthcare equipment for frontline responders amid the coronavirus crisis.

Skyrorary says that the entirety of its UK operations, including all human resources and its working capital are now dedicated to COVID-19 response. The startup, which was founded in 2017, had been working towards test flights of its first spacecraft, making progress including an early successful engine test using its experimental, more eco-friendly rocket fuel that was completed in February.

For now, though, Skyrora will be focusing full on building hand sanitizer, its first effort to support the COVID-19 response. The company has already produce their initial batch using WHO guidelines and requirements, and now aims to scale up its production efforts to the point where it can manufacture the sanitizer at a rate of over 10,000 250 ml bottles per week.

There’s actually a pretty close link between rocketry and hand sanitizer: Ethanol, the form of alcohol that provides the fundamental disinfecting ingredient for hand sanitizer, has been used in early rocket fuel. Skyrora’s ‘Ecosene’ fuel is a type of kerosene, however, which is a much more common modern aviation and rocket fuel.

In addition to sanitizer, Skyrora is now in talks with the Scottish Government to see where 3D-printed protective face masks might have a beneficial impact on ensuring health worker safety. It’s testing initial prototypes now, and will look to mass produce the protective equipment after those tests verify its output.

Plenty of companies are pitching in where they can, including by shifting their production lines and manufacturing capacity towards areas of greatest need. It’s definitely an ‘all-hands-on-deck’ moment, but there’s definitely a question of what happens to businesses that shift their focus this dramatically once the emergency passes, especially for young startups in emerging industries.

Attract, engage and retain employees in the new remote-work era

Published March 27, 2020

Irene DeNigris
Contributor

Irene DeNigris, chief people officer of iCIMS, has a passion for cultivating a highly engaged, high-performance culture.

When looking for answers, where do people first turn? For many, it’s Google.

During the first half of March, we saw Google searches for “work from home” reach a 12-month high, garnering at least 50% more search interest than the anticipated peak, which usually occurs within the first week of January. This number will continue to grow as outside circumstances evolve.

This search behavior reflects the world around us. Today, employees and employers alike are grappling with the new norm — at least for the short-term — which is working remotely. While having a remote-ready model in place was once viewed as a competitive advantage to attract talent, it’s now a must-have to keep organizations afloat.

With vacant positions costing organizations around $680 daily, the impact that interrupted recruiting efforts can have on a business’ bottom line is jarring. As such, HR professionals were early adopters of successful remote communication practices, learning lessons that can be applied across the business to successfully make personal connections without being in-person. Employers are doing all they can to address their existing employee base at this critical time, while also working hard to maintain their hiring efforts.

Having the right technology in place to sustain work-from-home practices is more important now than ever before. There are four steps that employers can take to successfully integrate and adapt successful virtual hiring technologies into their business continuity plans, considering all outside circumstances, and without sacrificing their productivity and unique company culture.

Prepare and plan. Employers have an obligation to provide their people with clear direction in times of disruption.

When is it time to stop fundraising?

Published March 27, 2020

Russ Heddleston
Contributor

Russ is the co-founder and CEO of DocSend. He was previously a product manager at Facebook, where he arrived via the acquisition of his startup Pursuit.com, and has held roles at Dropbox, Greystripe, and Trulia. Follow him here: @rheddleston and @docsend

Now might be the perfect time to rethink your fundraising approach

Published March 27, 2020

Russ Heddleston
Contributor

Expectations have shifted and will continue to do so

If you were about to kick off a fundraising round, you should have been prepared to contact 50 or more investors, have 20-30 meetings and spend somewhere around 20 weeks before you signed your term sheet. That’s a lot of time and energy to invest, especially when the economy is poised for a downturn and you’re most likely needed in other parts of your business.

If you’ve already started your round and are wondering if you should push through, I’ve written a piece on knowing when to quit and recalibrate versus when to push through (Extra Crunch membership required).

Many factors play into navigating a successful fundraising round, and the expectations of investors are constantly changing — specifically when it comes to the pre-seed round.

Investors are now looking for market-ready products and want to see pitch decks that feature the content they’re expecting. We expect to see this focus intensify over the coming months as VCs have more time to spend not just to review pitch decks, but on due diligence for companies in which they plan to invest. Our new report outlines advice for pre-seed startups that are looking to adjust their fundraising strategy.

Focus on an MVP, not just a great PowerPoint

Our analysis reveals a shift in the level of readiness required by institutional investment to receive pre-seed funding. In the past, pre-seed startups could get by with just an MVPP (Minimum Viable PowerPoint). But now, investors are placing their bets on pre-seed startups that have already entered the market and developed an alpha, beta or shipping product.

In fact, 92% of companies with successful pitch decks had either an alpha, beta or shipping product, where only 68% of companies with unsuccessful pitch decks presented the same type of product readiness.

As the economy moves closer to a downturn we can expect VCs to be more cautious with their investments. The current data already shows a preference for companies that have live products; it’s worth the time and effort to be product-ready coming into a pre-seed round or if you’re a startup ready to tackle the round again with a fresh perspective.

Rethink your deck

That said, even if you do have an MVP, rethinking your pitch deck may be something else to consider. Here’s a good test. Using your pitch deck, spend three to four minutes (that’s all the time you’ll get from a VC) to pitch your business to a friend or family member who knows nothing about your business. Afterward, ask them for a one-sentence description of your company. If they’re not clearly describing what your company does and the problem it’s trying to solve, you probably need to rethink your pitch deck.

According to our recent report, a “less is more” attitude toward creating a compelling pitch deck for meetings could mean more success in pre-seed fundraising.

Your pitch deck will be your main calling card right now. As community events are being replaced with online gatherings during the COVID-19 pandemic, we can expect to see less one-to-one engagement at these events. So pitching a VC in person is not likely to happen anytime soon. Whether you’re sending them a cold email, or getting a warm intro from a portfolio company, you’re going to need to lead with your pitch deck.

Despite the product taking a more prominent role in the fundraising round, the pitch deck is still a focal point and should be tailored to tell your story in the most effective way, as investors are spending less time evaluating them. On average, investors are spending just 3 minutes and 21 seconds on the pitch deck and the average deck is just 20 slides.

If you are in the process of reevaluating your pitch deck, it could be helpful to make sure your slides feature the right content in the right order. Investors spend nearly 50% more time on the product slides in successful pitch decks and over 18% longer on the business model in unsuccessful pitch decks. Additionally, investors spent more time on solution slides in successful decks than unsuccessful decks.

It’s a numbers game… to a certain extent

Another area that could benefit from reevaluation is the number of investors contacted, meetings held and the number of weeks spent in a funding round. Generally speaking, the average amount of investors contacted for successful fundraising rounds is 56, resulting in 26 meetings. On average, successful pre-seed startups will spend 20.5 weeks on fundraising.

When it comes to fundraising, there are diminishing returns for investor outreach. You shouldn’t need to send your deck to more than 60-70 investors and have more than 20-30 meetings. If you’re doing more than that, the ROI on your time just isn’t worth it. Because the current crisis is affecting VCs’ willingness to invest, you’re better off finding a small list of investors who are active and targeting your pitch to them. If you’ve reached out to more than 70 investors, but you’re still faced with a wall of “nos” you’re better off pausing your fundraising and addressing the feedback you’ve received so far. For more on when you should quit and reevaluate versus push through you can read my article here (Extra Crunch membership required).

Another area pre-seed startups should evaluate is the number of founders of a company. Our data shows investors still prefer teams of two-three founders, though our data shows that being a solo founder is preferable to having too many founders. For teams of five founders, they averaged earning $195,085 while founding teams of three garnered $511,522.

This may be the right time to find a co-founder. With many people working from home or out of work, this could be the opportunity to take your idea and bring on the technical founder you need. There are online groups and events popping up everywhere in response to social distancing. If you’re worried being a solo founder is going to hold you back, you may want to invest time in those new communities.

Get some perspective

For many startups, especially if you are not in Silicon Valley where a substantial amount of funding happens, the process of fundraising can be very opaque. DocSend’s purpose in analyzing this data is to bring some transparency to the process. This in turn provides perspective.

But what founders should do, if they haven’t done so already, is to get some additional perspective. Talk to experts outside your immediate circle of influence. Don’t have a mentor or advisors? Find them. Get a different take on your product idea or the market conditions. Especially now that community events are going virtual, location doesn’t have to hold you back from joining the startup community and finding people to offer feedback on your product or company.

Fundraising is both an art and science. Combining the insights from our data with the benefit of your own community can help you get back on your feet and pitching your company with hopefully a better outcome.